Year-End 2017 / Industrial Market Report. Tampa Bay

Transcription

1 Year-End 2017 / Industrial Market Report Tampa Bay Market Facts Broad-Based Demand Fueled Tampa Bay's Industrial Market Fundamentals During MSF Total inventory in Tampa Bay's industrial market 2,90,850 SF Direct net absorption for % Overall Vacancy $5. PSF Average rental rate for industrial space in Tampa Bay on a triplenet basis Economic Drivers Nationwide, the industrial sector continues to benefit from strong fundamentals even as a supply-demand imbalance persists. The industrial market remains in a state of expansion, fueled by the rapidly expanding logistics and e-commerce industries as well as demand for distribution space in the retail, transportation and wholesale sectors. A strong housing market has also created considerable demand for industrial space by construction companies in that sector. Economic fundamentals were strong and consumer confidence remained solid at year-end The unemployment rate has steadily declined, dropping 100 bps over the rate recorded in November 2016 to 3.6%, and the strong pace of job growth continues with over 5,000 new jobs added in the trailing 12-month period. On the national economic front, The Federal Reserve demonstrated its confidence in the growing U.S. economy by instituting a 25- bps interest rate hike in December, taking the fed funds target range to between 1.25% and 1.50%, with three additional hikes expected during Industrial Market Snapshot At the end of the fourth quarter of 2017, industrial fundamentals remained strong. The overall vacancy rate in Tampa Bay has risen only 1 bps since year-end 2016 to a very tight.71%, which is notable given that the market added 2.9 million sf in new industrial construction during Robust net absorption of 2.9 million sf has been recorded for the year to date, which equals the amount of new inventory, and rental rates continue to strengthen, with the direct weighted average rental rate for industrial space rising $0. per sf over the last year to a current $5. per sf on a triplenet basis. Net absorption has been robust within the East Side, Mid-Pinellas/Gateway and Lakeland submarkets, which together comprised the vast majority of all positive space absorption for the year.

2 Tampa Bay Industrial Market Report Year-End 2017 With industrial fundamentals strengthening it is likely that 2018 will look a lot like 2017 in Tampa Bay, characterized by strong net absorption, consistent leasing activity, and healthy rental rate growth. Average Asking Rent Rate ($/SF/NNN) $11.00 $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $.00 $3.00 $2.00 $7.99 $7. $7.26 $. $5.1 $5.68 Direct Vacancy Rate 7.00% 6.00% 5.00%.00% 3.00% 2.00% 1.00% 0.00% 5.80% 5.80% 5.95% $9.87 $5.89 $5.90 $3.77 $ %.3% YTD-2017 Historical Net Absorption (SF) Square Feet,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 (500,000) (1,000,000) Bulk Distribution Flex Manufacturing Warehouse/Distribution Blackstone Makes a $1.8 Billion Bet on Industrial The recent passing of the tax bill led to speculation that REITs would be favorably impacted by allowing higher after-tax dividends and encouraging sale-leaseback transactions, and Blackstone Real Estate Income Trust just announced its massive pending acquisition of a 22 million-sf nationwide industrial portfolio from Cabot Industrial Value Fund IV for $1.8 billion. The Tampa-based properties involved include 5025 W Knollwood St in the Airport/Westshore submarket and Pinebrooke Business Park in the East Side submarket. McDonald Development Plans New Business Park in East Tampa Atlanta-based McDonald Development, which back in 2015 acquired a 70-acre site in East Tampa, announced in November that it had signed a 200,000-sf lease with Bunzl to anchor the first building at its planned 301 Business Center development. The distribution company will occupy when the building is completed at the end of All three buildings will soon break ground, with the remaining two comprised of a 1,500-sf front-load warehouse and a 170,900-sf rear-load warehouse. Key Development Projects Beginning to Deliver Nearly 80% of all new industrial space added during 2017 was built on the East Side and along the I- Corridor, with another 1. million sf due for delivery in the area by mid-year New developments in the Lakeland area include a 5,2-sf bulk distribution building in CenterState Logistics Park entirely preleased to PepsiCo that is scheduled to deliver in early January, and an 830,000-sf building largely occupied by Medline that was completed during the fourth quarter. In the Plant City area, two buildings at County Line Logistics Center totaling 301,552 sf are expected to be completed during the first quarter, and the first building at Central Florida Commerce Center was completed. All three buildings remain fully available as of year-end Key deliveries during the fourth quarter in the East Side include the first two buildings at Crossroads Commerce Center, which were previously sold to New South Windows and Colonial Grocers, with another two following during the second quarter of Building VII in Oak Creek Commerce Park is also slated to deliver during the first quarter. Although it is not yet under construction, Cabot is also planning a two-building 387,000-sf distribution project at Aprile Farms on the East Side. The property, which offers I- frontage, is scheduled to break ground in mid-2018 for a mid-20 delivery. Looking Ahead Nationwide, industrial developers anticipate that supply will remain largely in check with demand, allowing for continued but moderate rental rate growth, that vacancies will remain low, and that demand for industrial space will be broad-based and not driven primarily by thriving e-commerce demand. With industrial fundamentals strengthening it is likely that 2018 will look a lot like 2017 in Tampa Bay, characterized by strong net absorption, consistent leasing activity, and healthy rental rate growth (particularly within newer bulk distribution and warehouse buildings in key corridors). Tight market conditions persisted throughout 2017 and are expected to continue in 2018, especially as attention shifts away from land-constrained areas to secondary markets like Tampa - and more specifically Hillsborough and Polk Counties. In the meantime, new bulk distribution and warehouse developments coming online in the East Side, Plant City and Lakeland areas should ease some of the current pent-up demand for industrial space.

3 Tampa Bay Industrial Market Report Year-End 2017 Bulk Distribution 25,577,095 $.71 1,5, % 5.5% 0.00% 5.5% 5,2 1,7,025 Flex 15,989,352 $9.58 1,280, % 8.01% 0.% 8.2% 0 135,206 Manufacturing 28,870,267 $ , % 1.91% 0.36% 2.27% 0 373,137 Warehouse / Distribution 82,989,001 $5.22 3,5, %.27% 0.32%.59% 850, ,82 Market Total 153,25,715 $5. 6,791, %.3% 0.28%.71% 1,56,12 2,90,850 Airport/Westshore Flex 3,865,980 $ , % 6.28% 0.20% 6.7% 0 (39,95) Manufacturing 1,,832 $6. 7, % 0.62% 0.00% 0.62% 0 90,209 Warehouse / Distribution 8,297, $ , % 3.72% 0.03% 3.7% 0 (105,277) Airport/Westshore Total 13,358,6 $ , %.18% 0.07%.25% 0 (5,563) Downtown Tampa Bulk Distribution 550,09 $ % 0.00% 0.00% 0.00% 0 0 Flex 1,6 $ % 0.00% 0.00% 0.00% 0 0 Manufacturing 886,171 $ , % 13.32% 0.00% 13.32% 0 0 Warehouse / Distribution 3,720,135 $.97 98, % 2.65% 1.36%.01% 0 21,2 Downtown Tampa Total 5,301,326 $. 216,6 95.%.08% 0.95% 5.0% 0 21,2 East Side Bulk Distribution 8,179,7 $ ,970.3% 7.57% 0.00% 7.57% 0 721,202 Flex 3,63,221 $9.6 7, % 5.2% 0.00% 5.2% 0 106,259 Manufacturing 5,58,9 $ , % 1.23% 0.00% 1.23% 0 1,15 Warehouse / Distribution 29,278,778 $.83 1,68, % 5.63% 0.72% 6.35% 59,1 366,15 East Side Total 6,650,189 $5.17 2,532, % 5.3% 0.5% 5.88% 59,1 1,,769 North Hillsborough Flex 1,136,683 $ , % 12.97% 0.00% 12.97% 0 (39,9) Manufacturing 718,886 $ , % 2.30% 0.00% 2.30% 0 17,953 Warehouse / Distribution 1,188,151 $ , % 2.36% 0.00% 2.36% 0 11,350 North Hillsborough Total 3,03,720 $7. 1, % 6.31% 0.00% 6.31% 0 (10,626) Plant City/East Hillsborough Bulk Distribution 2,722,36 $ % 0.00% 0.00% 0.00% 0 0 Flex 133,363 $7.86 2, % 1.89% 0.00% 1.89% 0 3,220 Manufacturing 2,338,697 $ , % 1.11% 0.00% 1.11% 0 0 Warehouse / Distribution 5,957,165 $ , % 5.76% 0.00% 5.76% 301,552 1,110 Plant City/E Hillsborough Total 11,151,589 $ , % 3.33% 0.00% 3.33% 301,552 17,330 South Tampa Bulk Distribution 679,129 $ % 0.00% 0.00% 0.00% 0 0 Flex,681 $ % 0.00% 0.00% 0.00% 0 0 Manufacturing 52,291 $.50 67, % 12.% 0.00% 12.% 0 0 Warehouse / Distribution 1,307,377 $.55 27, % 2.08% 0.00% 2.08% 0 58,093 South Tampa Total 2,589,78 $.51 9, % 3.65% 0.00% 3.65% 0 58,093 PINELLAS COUNTY TAMPA BAY MSA TOTAL Mid Pinellas/Gateway Bulk Distribution 112,722 $ % 0.00% 0.00% 0.00% 0 0 Flex,396,633 $ , % 8.82% 1.31% 10.13% 0 90,37 Manufacturing 11,703,736 $ , % 1.16% 0.88% 2.0% 0 223,3 Warehouse / Distribution 13,651,181 $6.36, %.26% 0.00%.26% 0,826 Mid Pinellas/Gateway Total 29,86,272 $7.26 1,10, % 3.70% 0.5%.2% 0 918,5 North Pinellas Flex 1,91,63 $ , % 5.65% 0.00% 5.65% 0 22,790 Manufacturing 1,8,5 $ % 0.00% 0.00% 0.00% 0 0 Warehouse / Distribution 3,868,503 $6.2 62, % 1.61% 0.00% 1.61% 0 (17,930) North Pinellas Total 6,778,507 $ , % 2.16% 0.00% 2.16% 0,8 South Pinellas Bulk Distribution 350,000 $ % 0.00% 0.00% 0.00% 0 0 Flex 273,106 $ , % 9.% 0.00% 9.% 0 (17,00) Manufacturing 1,73,161 $ , % 1.28% 0.00% 1.28% 0 50,61 Warehouse / Distribution 5,5,832 $.88 18, % 2.66% 0.00% 2.66% 0 22, South Pinellas Total 7,959,099 $5.89 6, % 2.7% 0.00% 2.7% 0 55,913 LAKELAND Lakeland Bulk Distribution 12,983,05 $ , % 6.1% 0.00% 6.1% 5,2 725,823 Flex 83,296 $9. 1, % 22.83% 0.00% 22.83% 0 9,027 Manufacturing 2,7,503 $.3 89, % 3.22% 0.00% 3.22% 0 (10,000) Warehouse / Distribution 10,127, $ , % 2.96% 0.01% 2.98% 0 10,372 Lakeland Total 26,729,1 $5.68 1,378, % 5.16% 0.00% 5.16% 5,2 735,222 Reporting Methodology: This report includes all industrial buildings and parks 20,000 SF and greater in the Tampa Bay MSA that are not government owned. All rents are reported on a triple net basis. The information in this report has been collected by the Avison Young research team via sources that are deemed reliable but not guaranteed.

4 Tampa Bay Industrial Market Report Year-End 2017 The industrial market remains in a state of expansion, fueled by the rapidly expanding logistics and e-commerce industries as well as demand for distribution space in the retail, transportation and wholesale sectors. Leading Indicators (Y-O-Y Q-2016 to Q-2017) Vacancy Rate.71% Net Absorption 2,90,850 SF Average Asking Rate PSF (NNN) $5. Under Construction 1,56,12 SF Total Employment 1.6 MM Significant Fourth Quarter 2017 Lease Transactions - Sorted by SF Tenant Property Type SF Submarket Bunzl 301 Business Center New 212,900 East Side American Builders Supply Oak Creek Commerce Park New 116,000 East Side Climatic Corporation* Harney Distribution Center New 62,000 East Side Ferguson Fire & Fabrication, Inc. Fairfield Distribution Center New 56,300 East Side Fidelitone Oak Creek Commerce Park New 5,08 East Side PODS Eagle Creek Business Center New 51,09 East Side IGT Global Solutions Corp* 2501 Willamette Dr Renewal 8,800 Plant City/E Hillsborough Undisclosed Tenant 6818 S Manhattan Ave New 6,079 South Tampa Seminole Tribe of Florida* Tampa East Distribution Center 3 Renewal,0 East Side Southbay Tampa East Industrial Center New 0,000 East Side Chris Lapi Moving Tampa Distribution Center Renewal 37,500 East Side Dermatech Direct* Adamo Distribution Center New 30,850 East Side Rugby Holdings, LLC Expressway Commerce Center B Renewal 28,615 Airport/Westshore Tar-Mak USA, Inc.* Adamo Distribution Center 5 Renewal/Expansion 27, East Side Tom Barrow Company* Expressway Commerce Center A New 26,000 Airport/Westshore Tesla/Solar City Madison Distribution Center New 25,676 East Side Tuff Shed, Inc* 501 Hobbs St Renewal 25,266 East Side Real Floors 8108 Krauss Blvd New 25,000 East Side Florida Fresh Vending* Center Point Business Park D New 2,000 East Side Vivint Solar Development, LLC* Hanna Distribution Center New 23,000 Airport/Westshore Significant Fourth Quarter 2017 Sales Transactions - Sorted by Sale Price Property SF Sale Price Price/SF Cap Rate Buyer Submarket Westmount Realty Cap Portfolio 330,313 $21,300,200 $6 NA Citimark Management Co Airport/Westshore 5 Pioneer Park Blvd 150,05 $8,62,500 $56 NA Citimark Management Co Airport/Westshore 82 Sunstate St 59,78 $5,8,800 $91 NA Citimark Management Co Airport/Westshore 803 Sunstate St 7,020 $,0,900 $86 NA Citimark Management Co Airport/Westshore 893 W Waters Ave 73,55 $3,37,000 $6 NA Citimark Management Co Airport/Westshore 51 Belcher Rd N 150,055 $1,500,000 $97 NA Madico Inc Mid-Pinellas/Gateway Crossroads Commerce Center 2 236,800 $1,300,000 $ NA NewSouth Window Solutions East Side Meridian East 6,636 $8,250,000 $2 8.50% High Street Realty East Side 330 Sydney Rd 128,956 $8,000,000 $62 NA Saputo Dairy Foods USA LLC Plant City/E Crossroads Commerce Center 1 112,800 $7,500,000 $66 NA Colonial Grocers, Inc. East Side 5100 W Linebaugh Ave* 90,000 $6,300,000 $70 NA MS International, Inc. Airport/Westshore * Avison Young handled this transaction 2018 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.

5 Tampa Bay Industrial Submarkets Ho l i d ay NORTH PINELLAS Ta r p o n Springs MID PINELLAS-GATEWAY PASCO COUNTY PINELLAS COUNTY SOUTH PINELLAS Tr i n i t y Ch eva l Keys to n e 597 No r t h d a l e Ci t ru s Pa rk 2 We s tc h a s e BUS Ca r ro l l wo o d U n i ve r s i t y USF 597 Oldsmar 1 Tow n ' N ' Co u nt r y S a fe t y H a rb o r Ta m p a Int l Airport Cl e a r wate r 699 Belleair 611 Belleair 686 Indian Rocks 688 Indian Sh o re s L a rg o Seminole R e d i n g to n Sh o re s 0 Downtown Tampa BUS Th o n o to s a s s a 57 S e ff n e r 57 Mango P l a nt Ci t y D ove r 301 Port of Tampa B ra n d o n 618 Va l r i co Pa l m R i ve r Cl a i r M e l Pro g re s s Vi l l a g e Pi n e l l a s Pa rk 582 Te m p l e Te r ra ce Ta m p a Channelside Fe at h e r Sound B a rd m o o r 582A 583 E a s t O r i e nt Pa rk S t Pe te - C l e a r wate r Int l Airport Eg y p t - Le to Magdalene 589 POLK COUNTY Lu t z East Dunedin Cr ys t a l Springs Odessa 611 Pa l m H a rb o r Ze p hy rh i l l s We s l ey Ch a p e l Land O' s 98 Bloomingdale POLK CITY 39 POLK COUNTY 33 R i ve r v i ew Macdill AFB Fi s h H aw k G i b s o nto n Le a l m a n B ay 699 Pi n e s M a d e i ra R e d i n g to n 3 Tre a s u re Is l a n d South Pa s a d e n a S a i nt Pe te r s b u rg Ap o l l o 1 Gulfport St. Pe te L akeland PINELLAS SUBMARKETS Year-End 2017 Ruskin S u n Ci t y Ce nte r Wi m a u m a MANATEE COUNTY Balm 67 Ti e r ra Ve rd e LAKELAND HILLSBOROUGH SUBMARKETS NW TAMPA E HILLSBOROUGH - PLANT CITY WESTSHORE EAST SIDE SOUTH TAMPA DOWNTOWN TAMPA Contact Information Ken Lane, Principal and Managing Director ken.lane@ Clay Witherspoon, Principal and Managing Director clay.witherspoon@ Tim Callahan, Principal tim.callahan@ Trey Carswell, Principal trey.carswell@ Lisa Ross, Senior Vice President lisa.ross@ Lisa McNatt, Director of Research 135 W Central Blvd, Suite 700 Orlando, FL lisa.mcnatt@ 2018 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.